Considering earning some extra income by working for a ride-hailing company such as Uber or Lyft? There are some important things that you should consider before you do.

Personal auto policies will almost always specifically exclude coverage for claims arising out of the commercial use of a vehicle. If you are receiving compensation, it is considered commercial use even if it's your personal vehicle. So it is important for you to understand that you should not expect your personal auto policy to cover you when you're working for a ride-hailing company. This would not only include any damages to the vehicle itself, but even more importantly, it would also include injuries to you, your passengers and any other parties that would be involved in an accident.

Ride-hailing companies usually provide coverage for their drivers, but only if the driver has their own insurance as well. If you let your personal auto policy lapse, do not expect the ride-hailing company's insurance to cover you while you're working for them.

The coverage that the ride-hailing companies provide is usually in three forms:

On Trip - Liability and Uninsured/Underinsured Motorist coverage from the time you accept a trip until the end of the trip. Contingent Collision and Comprehensive coverage is provided for damage to your vehicle as long as you already carry these coverages on your personal auto policy. However, the deductibles for these coverages are usually high ($2,500 or more). If you have a lien on or are leasing the vehicle, you should check with the finance company to make sure they will allow you to carry this high of a deductible. If you don't carry Comp and Collision on your personal insurance, there will be no coverage for your vehicle from the ride-hailing company. The other thing that you need to consider here is whether the limits provided by the company are high enough. If the company provide $1M of liability and you cause an accident where three people are killed, is $1M going to be enough to cover the judgement from three families? If not, your personal assets (home, savings, etc.) could be at risk for the difference.

Between Trips - a limited amount of Contingent Liability coverage is provided while the app is in driver mode but you have not yet accepted a trip. For instance, you're driving around waiting for a trip and you have an accident. The ride-hailing company's coverage will usually only cover up to $50,000 per person and $100,000 per accident for any bodily injury liability and only $25,000 for any property damage. When you consider the fact that a life-flight ride can cost $30,000-$40,000, not including any medical treatment, etc., it is very easy to exceed the $50,000 per-person limit. And how many vehicles are there out on the road that are valued at more than $25,000? A lot! Keep in mind that your personal insurance will not cover you while you're working for a ride-hailing company, even though you may not have a passenger at the moment. Even if you're hit by an uninsured motorist between trips, you have no coverage either through the ride-hailing company or your own personal insurance policy. If you have injuries, the only coverage you would have would be through your own medical insurance, if you have it. If those injuries are extensive and you are unable to work, you would need to have disability insurance to provide you with an income, as you would have no coverage through either of the auto policies nor would you likely have coverage under Workers Compensation.

Offline - no coverage would be provided by the ride-hailing company and your personal auto policy would cover you for personal use.

While the assumption of the ride-hailing companies is that your personal auto policy would cover you while you're offline, you should not make the same assumption. Some insurance companies will cancel your coverage if the vehicle is used commercially as such use does not meet their underwriting guidelines and they don't want to become entangled in claims that could cost them a lot of money to defend, even if they should end up winning in court. You should talk to your local agent about whether or not the insurance you have would continue to cover you if you were to contract with a ride-hailing company. If you don't have a local agent, you've already made one mistake; don't compound it by making another.

One way to avoid all the gaps and pitfalls of trying to make a personal auto policy work in conjunction with the ride-hailing company's coverage is to insure your vehicle on a commercial policy. It may be a little more expensive, but could save you hundreds of thousands of dollars in the long run. And, most of the ride-hailing companies will provide their coverage as excess (on top of) if you carry commercial insurance on your vehicle.

This information is generic in nature. If you have any questions about your specific situation, you should consult an experienced and knowledgeable, local agent.

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